You might think it’s the onset of summer and the lure of vacation time that has me humming Jimmy Buffett’s “Changes in Latitudes, Changes in Attitudes” – and you might be right! But events happening here at Zywave have me contemplating other changes of locale as well, and I want to share those with you:

A change in latitude, as Jimmy Buffett suggests, can sure be a good thing! But don’t let my current preoccupation with tropical climes fool you – the National Workers’ Compensation and Disability Conference is in Las Vegas this year. A great registration discount is available to readers of the WorkCompEdge blog!

I’m excited to announce that I’ll be presenting at the 21st annual National Workers’ Compensation and Disability Conference® & Expo. Billed as “the nation’s leading event for anyone involved in the workers’ comp and disability management industries,” the conference will be held November 7 – 9, 2012, at the Las Vegas Convention Center. The agenda includes four tracks:

Better Claims Management (featuring a session by yours truly),

Health and Medical Management,

Solving Legal and Regulatory Issues, and

one of the hot topics in workers’ comp these days, Opioid Solutions.

This conference focuses on valuable session takeaways and includes the expertise of presenters and panelists from all aspects of workers’ comp. Check it out – and if you decide to go, don’t miss this discount available to you as a reader of the WorkCompEdge blog: Continue reading →

“We just can’t change your mod,” Ron Cooper says, describing his conversations with employers who contact the Indiana Compensation Rating Bureau (ICRB) in frustration over their most recent experience mod value. While some of those calls may be about the impact of an unexpected mod increase on an employers’ workers’ comp premium, the most troubling ones are from employers in construction-related industries who can effectively no longer do business because their mod is over a certain value required to bid on a contracting project.

Should the construction and contracting industry revisit its use of the experience mod rating (EMR) as criteria for bidding on projects? Ron Cooper, President of the Indiana Compensation Rating Bureau, is encouraging study and discussion of the issue in his state.

This isn’t a problem specific to Indiana. Nationwide, the construction industry has been using the experience mod rating (also known as the mod, e-mod, ex-mod, or EMR) as a qualifier for about 20 years, ICRB President Cooper estimates, because it reflects “third party, objective, and reliable, audited data.” The EMR is commonly used by construction project managers and safety organizations to prequalify contractors for worksite eligibility. Oftentimes the contractor’s mod must be below 1.00, 0.90, or even lower.

But the EMR is designed as a pricing modifier to determine insurance premium, not as a tool to qualify contractors for projects, Cooper says in a white paper published by the ICRB. The paper, now at the center of groundbreaking industry discussions in Indiana, stands to lead the way for national reform in the use of the experience modifier as a qualifier for awarding construction projects.

“We’ve always tried to be proactive,” says Cooper, who began his career at NCCI and has been with the Indiana bureau since 1995. In the past year he’s proven that with this issue, meeting with construction industry representatives in Indiana to talk about the flaws of using the EMR as a qualifying metric. Some of those flaws, as discussed in the paper, include: Continue reading →

Over 3,500 employers recently participated in Zywave’s 2012 P&C Workers’ Compensation & Safety Survey. Overall results will interest employers and work comp professionals alike, but if you’re an agent or broker, I think the results of just one question should particularly command your attention.

Over 3,500 employers from across the nation responded to the survey. This graph shows their distribution by state where they reported the highest number of employees.

First, a little demographic data about the survey participants: The employers represented are well distributed across the nation and come from 20 business sectors, with heaviest representation from manufacturers (17 percent), health care and social assistance providers (15 percent), and construction (13 percent). Survey takers identified themselves as human resource personnel (36 percent), finance staff (19 percent), CEOs or presidents (16 percent), and other staff, including safety managers, risk managers, and operations directors. Some 57 percent of those participating reported workers’ compensation premiums under $50,000 annually.

For the first time in this annual survey, we asked respondents some specific questions about experience rating. Of those responding, 5 percent said they were not experience rated, and 28 percent said they didn’t know if they were experience rated. Since very small companies are often not experience rated and some respondents reported the majority of their operations in the few states that don’t experience rate, these numbers don’t seem unreasonable.

But then. For those who reported that their companies were experience rated, we asked:

Do you know the value of your company’s minimum mod (also known as “loss-free rating”)? Continue reading →

Perfect and yet attainable scores apply to many areas of life: credit reports, bowling, the game of Yahtzee, and ACT college prep exams immediately come to mind. These are cases in which the higher the score, the better. Less commonly, an excellent score is represented by a low number: as Zywave’s VP of Sales Operations Craig Passler would be quick to point out, golf is an example, even if it doesn’t have a true perfect score. (Get to know Craig through one of his blog articles on sales forecasting and the weather.)

If you think of your experience rating mod as a game of golf, you want it to be under par – not just average. You also want to know what your company’s perfect score can be – and then implement loss control and prevention measures to attain that perfect score.

Did you know that you can have a perfect score on your workers comp mod? Continue reading →

Insurance and risk management professionals who are monitoring the coming change to the workers’ compensation experience rating process will be interested in these brief pieces of news related to the 2013 split point change:

Most helpfully, several hypothetical examples are discussed. Especially notable in this section is how employer size and the relationship of class severity to discount ratio may affect the mod in conjunction with the new split point.

A majority of states have already approved the split point change to take effect with their 2013 loss cost or rate filing, but what of the independent bureaus?

New York is on track for a split point change to $10,000 effective 10/1/2013.

…the [Actuarial] Committee approved an increase in the split point from the current $5,000 to at least $15,000 in several steps, with the first step to be set at $10,000 effective October 1, 2013. Further research was recommended to determine appropriate split points subsequent to that date.

Wisconsin has the split point change under consideration, but not yet approved.

This item [E-1402] was disapproved by the OCI [Office of the Commissioner of Insurance]. WCRB will respond to the items of concern and request reconsideration of the disapproval.

Other independent states which use similar rating methodology but do not use NCCI for interstate intrastate mods are Michigan, Minnesota, and Texas. If those states have a split point change under consideration or approved, I’ve not yet seen such information. If you’re in those states and have heard any news regarding the split point, I know our readers would love for you to share via a comment!

I have an affinity for detective and crime shows, and this year I’ve added The Mentalist to my list of favorites. The show features character Patrick Jane, who formerly posed as a psychic and now consults with the California Bureau of Investigation. In each episode, Jane reliably uses his superior powers of observation to have the “whodunnit” figured out from the beginning, even though we viewers have to watch the story unfold and wonder, along with the rest of the CBI force, if the complicating factors and clues are leading us to the right culprit or not.

Discovering the drivers of change in a company's experience mod is an opportunity that helps you communicate expectations and keep the company focused on long term goals of improving safety and thus lowering its mod and workers' comp premiums.

With a company’s experience rating mod factor, what we want to discover is not WHOdunnit, but WHATdunnit: that is, what caused the mod to increase or decrease from one year to the next? We can be almost as slick and successful as Patrick Jane if we know the right things to observe and the right questions to ask.

Of course companies are more likely to be concerned by a mod increase, but they may also celebrate a decrease (and the broker, risk control expert, and/or safety consultant who helped them achieve such a decrease). Understanding the specific reasons that a company’s mod fluctuates from year to year is important because, as the adage goes, in understanding the past we also understand the future.

Here are 5 questions you can consider and answer, using mostly the summary numbers from 2 consecutive years of a company’s mod worksheets from the applicable bureau, to uncover the cause(s) for a mod increase or decrease from one year to the next. Continue reading →

Starting a new mod in ModMaster? Select "NCCI" for any calculation using the NCCI or similar method, including California mods prior to the 2012 plan change. For California mods effective 1/1/2012 and later, be sure to select "CA," and note that you must use ModMaster 5.0.

In addition to recent formula changes for 2012 in the California experience rating plan, the WCIRB has also adopted a significantly new format for its experience rating worksheet. You’ll think I’m a geek (if you didn’t already) for admitting this, but I’m loving the new format. While of course I’m partial to the myriad ways we slice, dice and present mod data in ModMaster reports, I think the new bureau format takes a huge step forward in usability. Here are four reasons why.

1. Documentation. A sample of the new format is shown on this WCIRB web page. As you’ll see, each section is labeled with a nice bright number, and clicking on the number takes you to an explanation of that section. An updated explanation of the experience rating form and process also follows the employer’s worksheet itself, so you’ve got both hard copy and online resources to help you understand, clarify, or discuss any part of the report.

2. Layout. The WCIRB has abandoned the old format, which had all payroll and expected loss information followed by all actual loss information. Under the new format, the left side of the page is payroll and expected loss information, and the right side of the page is actual loss information. The data is further organized by policy period (in descending order), so it’s very easy to go down the page, look at the totals row for each period, and compare expected primary and excess totals on the left with actual primary and excess totals on the right. Continue reading →